JOHNMWILLIS BLOG

In my last blog article I talked about analyst groups and my thoughts thereof.Venture Capitals (VCâ€™s) are a great follow-on in a vendor to analyst group (AG) food chain.As I described in the aforementioned blog article I noted that vendors tell analyst groups what they want to hear.Well, analyst groups basically tell VCâ€™s what they want to hear.It is a vicious food chain where the analysts and VCâ€™s eat their young (not really I just thought it sounded cool).VCâ€™s are also customers of analyst groups as well as vendors.Although, I think this is another conflict of interest for analyst groups there is no concept of conflict of interest in the VC world.In fact most times you canâ€™t tell a VC or an AG apart.Actually the only way is by their net worth. Again is anyone doing any serious research on what VCâ€™s are brining to the OSS table good or bad. Do VCâ€™s really just make an OSS vendor another feature driven software company?

In the ESM OSS space you can use Groundwork again as a template (sorry Dave, however I know you agree with me). Groundwork is a sales and feature driven organization and probably lost its organics the day the VCâ€™s appointed the CEO. Then comes CFO, then the EVP of sales and last but not least an EVP of marketing. Think about it, in a truly organic OSS project why would you have marketing? The beauty of OSS is that the community grows the project not the EVP of marketing.In most of the software companies I have worked for marketing requirements drive development projects and marketing requirements come from customerâ€™s needs. Which customers? The ones the sales guys are screaming about the most.

The thing is that the VCâ€™s havenâ€™t figured out how this OSS thing works yet and when they get 20 million plus into a company they run the show regardless. What do VCâ€™s do best?Go with what has worked for them in the past. You see a VC can fail 17 out of 20 times but those three hits make up for another 20 and then some. Therefore they are never wrongâ€¦ never â€¦ You canâ€™t argue with a billionaire. I have tried trust me. Sorry to keep picking on Groundwork but they have their chin out the farthest. Everyone in that company knows they should do a pure services play but the CEO is in denial. In fact he told me personally that there is no way the VCâ€™s will let them talk services. IMO, VCâ€™s were looking for traditional exit strategies with OSS ESM plays and were hoping to time the OSS bubble for Big 4 buyouts. Time is running out.Donâ€™t forget a lot of the Big Four companies are a vast consolidation of VC funded startups (Tivoli, Marimba, MicroMuse, Novadign, the list could go on for days).

I am sure someone can site tons of examples of VC and OSS working and of course ventures like JBOSS had huge payoffs.The one thing I know is that the days of 10x to 15x are numbered and until the VCâ€™s take their heads out of the sand and realize that the software industry is changing and it is all about knowledge IP and services (see my Reusable IP blog ) VCâ€™s will continue to convolute OSS vendors.

[...] has recently posted a really good article about the possible future of Acquia. I am telling you VC’s are the root of evil of everthing that is good about open source.Â I hope the VC’s don’t screw up a good [...]